Altice to buy French telecom operator SFR
European cable group Altice has emerged victorious in its battle with Bouygues to buy France’s second-biggest telecom operator SFR in a €17bn deal that will recast the country’s telecoms landscape. Altice, which intends to merge SFR with Numericable, its French subsidiary, will pay Vivendi €14.25bn in cash and a 20 per cent stake in the resulting company to be sold later, according to an announcement by Vivendi on Saturday. Vivendi turned down a thrice-enhanced and French government backed rival offer from construction and telecoms conglomerate Bouygues, which has more cash upfront but a lower stake in the overall company. "Vivendi has made the best choice with a balance between cash received immediately and the equity stake entitling the group to receive the highest total valuation," said Vivendi, adding that the whole offer would be worth €17bn. The decisions is a blow for Bouygues, the country’s third-largest mobile provider, which has suffered at the hands of increased competition since low-cost Free came to the market two years ago with ultra-low offers. A Bouygues victory would have created the country’s largest carrier with an estimated 42 per cent of the market and possibly spelt the end of a two-year price war that has forced operators into making deep cost cuts. Vivendi came under significant government pressure to accept the Bouygues offer, with Arnaud Montebourg, France’s industry minister, openly supporting the rival offer and criticising the Altice bid, saying that it posed "problems". Mr Montebourg has been worried about the impact on jobs and investment that the price war has created in the sector, hoping that consolidation would help turn back the tide. But for Vivendi the Bouygues offer, sweetened at the last minute on Friday, raised concerns that it would be held up by competition authorities, given the similarities between the two companies as the second and third largest operators. "All experts consulted concluded that the bid by Altice/Numericable presents the lowest competition risk. SFR and Numericable are not present on the same market segments and their activities are complementary," said the board statement. The tie-up gives Numericable, which is backed by billionaire Patrick Drahi, the chance to offer its cable and broadband services to SFR’s roughly 22m mobile subscribers, and leaves Bouygues in a difficult position. The deal is just one of a number of blockbuster transactions in France this year as groups look for new ways to grown amid a sluggish French market. On Friday Lafarge and Holcim said they were in talks to create a $40bn global cement giant. They follow Peugeot’s €3bn capital-raising effort that will see Chinese automaker Dongfeng become a large shareholder alongside the French state, as part of the group’s plan to expand in the Asian markets. The Vivendi deal will see Altice make a first payment of €13.5bn, a separate €750m payment and then the option for Vivendi to own and then sell a 20 per cent stake in the new entity, according to Vivendi.